June 4 (Bloomberg) -- Odyssey Marine Exploration Inc. plunged as much as 64 percent after a U.S. judge recommended that property from a sunken ship codenamed “Black Swan” be returned to Spain.

Odyssey fell $1.66, or 43 percent, to $2.21 at 4:30 p.m. New York time in Nasdaq Stock Market trading, cutting its market value to $108.5 million. The shares earlier touched $1.39, the lowest since July 2003. Odyssey, based in Tampa, Florida, said in a statement yesterday that it will oppose the recommendation.

“This is clearly a case where there are many relevant issues of fact that have been disputed, including the issue of whether the Mercedes was on a commercial mission and whether the property recovered belonged to Spain,” Odyssey General Counsel Melinda MacConnel said in the statement. The sunken ship’s full name is Nuestra Senora de las Mercedes.

Odyssey, which searches for sunken treasure, said in May 2007 it recovered more than 17 tons (15,422 kilograms) of silver coins from the ship, which went down in the Atlantic Ocean off the Strait of Gibraltar. Spain contested the company’s claim to the wreck.

Spain claims the ship is “a Spanish frigate that exploded in a pivotal 1804 engagement with the British and precipitated Spain’s declaration of war against Britain,” U.S. Magistrate Judge Mark A. Pizzo in Tampa wrote in his report yesterday.

Spanish ‘Arizona’

Pizzo agreed with Spain that the U.S. lacks jurisdiction over the case and recommended that U.S. District Judge Steven D. Merryday drop it and order the property returned to Spain. None of the exceptions Odyssey offered to a federal law applied, he said. The Foreign Sovereign Immunities Act grants immunity to a foreign state’s property in the U.S. from being taken.

“The decision recognizes that there is a vital interest for the U.S. and Spain and other nations to respect the resting place of sailors who died at sea,” James A. Goold, a lawyer for the Spanish government at Washington’s Covington & Burling LLP, said in a phone interview today. “The Mercedes is the Spanish equivalent of the USS Arizona in Pearl Harbor. How can anyone think it would be OK to strip the site of valuables?”

Pizzo also said the U.S. can’t decide Peru’s claim against Spain to some of the treasure. Peru wasn’t an independent nation at the time of the wreck.

The case is Odyssey Marine Exploration Inc. v. The Unidentified Shipwrecked Vessel, 07cv614, U.S. District Court, Middle District of Florida (Tampa).

To contact the reporter on this story: Thom Weidlich in New York at tweidlich@bloomberg.net.

Last Updated: June 4, 2009 16:47 EDT